« December 2006 Table of Contents
Gulf Coast seafood industry still trying to
Louisiana oyster farmers are pursuing a group crop
insurance plan to help avert future financial ruin
By James Wright
December 01, 2006
Continued from cover
A s Hurricanes Katrina and Rita lashed against the Gulf
Coast last year, the region's fishermen and shellfish growers
hoped their families and loved ones, not to mention their boats
and oyster beds, would survive the colossal storms. After the
hurricanes passed and the damage could be measured in dollars,
the Gulf seafood industry faced the question, "Where do we go
from here?" Fifteen months later, many harvesters and
processors are still looking for the answer.
This summer, Congress approved a $94.5 billion war and
hurricane-relief spending bill that included about $20 billion
for the Gulf region. However, the aid package that earmarked
$127 million in grants for rehabilitating key fishing and
shellfish-cultivation areas was just a drop in the bucket
compared to the $1.1 billion that the five Gulf Coast states
initially sought to help repair the damage to their seafood
industry - one that lands about 1.5 billion pounds annually, or
about 15 percent of the nation's seafood landings.
The grants will certainly help repair shellfish grounds that
have been cultivated by generations of harvesters and
processors. But the industry knows it must plan ahead to avoid
a similar fate in the future: Processors are building new
facilities inland; federal aid is improving communication with
emergency response teams and health inspectors; and oyster
farmers are hoping a group insurance plan can avert financial
ruin if their crops are destroyed.
But without direct assistance, a lot of the region's proud
shrimpers, processors and oyster farmers feel like yesterday's
"We've been abandoned," says oyster farmer and shrimp
fisherman George Barisich, who also serves as president of the
United Commercial Fishermen's Association in New Orleans.
Barisich quickly points out that of the total $150 million
industry aid package, nothing went directly to fishermen, yet
more than $20 million was directed to the National Marine
Fisheries Service to restore its laboratories and improve its
hurricane-damage reporting abilities.
"W e've been paying taxes, stimulating the economy and doing
good business for generations," says Barisich. "But when we
need it the most, when we need a little help, we didn't get it.
It's just sad."
"Not a penny came to any of the fishermen hurt by the
hurricanes," says Bob Jones, executive director of the
Southeastern Fisheries Associa-tion of Tallahassee, Fla. "We
were left out of the formula. All the recovery is being done by
the industry with no help from the state and federal
governments. And we don't have the political clout to do
anything about it.
"The [fishermen] who can afford to stay in will make it,
because they're not used to getting any help from anybody."
Needless to say, it's been a slow healing process in the
Gulf; fishermen fear their way of life is at risk. Ewell Smith,
executive director of the Louisiana Seafood Promotion &
Marketing Board in Metairie, La., confirms that about 60 to 70
percent of the state's fleet is fishing again. But it took a
lot of time, he says, and it will take a lot more for the
industry to fully recover.
"Fishermen aren't looking for handouts," says Smith. "Let's
help these folks get their boats back in the water. That's what
they want to do. They want to fish, and we want to put them
back to work."
To the rescue
Help has come to commercial fishermen in some unexpected
ways. In August, Shell Oil donated $500,000 to the Louisiana
Wildlife & Fisheries Foundation to purchase, deliver and
install two 20-ton-capacity ice machines for St. Bernard Parish
and open an industrial icehouse in Cameron Parish. Hurricane
Katrina hit both fishing areas hard and the severe ice shortage
and reduced storage capacity hindered the distribution of
seafood beyond the docks.
"You could just see how incredibly grateful people were and
the immediate impact in those communities," says Smith, adding
that the ice is being given to fishermen for free. "It will
stimulate a rebirth in these areas."
The entire food industry in the Gulf region continues to
struggle. According to Share Our Strength, which works to end
childhood hunger in America, less than half of the restaurants
in the New Orleans metropolitan area have reopened, and most
remain severely understaffed. Share Our Strength organized two
"Restaurants for Relief" dine-outs, one in September 2005 and
another on Aug. 28, during which hundreds of restaurants across
the country donated a portion of their proceeds to aid recovery
efforts for the area's foodservice industry. The two events
raised about $1.5 million for area schools, community kitchens,
food programs, farmers markets and restaurant and hospitality
Because the Gulf Coast is so closely tied to seafood -
gumbo, shrimp Creole and crawfish boils are a way of life - the
industry's recovery is essential to the economy and the
culture. In the months after Katrina, the industry's mettle was
tested on the waterfront, where the major needs were time,
money and helping hands.
Facing a massive cleanup operation, seafood and commercial
fishing associations from Texas, Loui-siana, Mississippi,
Alabama and Florida each submitted Community Development Block
Grant (CDBG) requests to the federal government for
infrastructure repairs. Not only were boats destroyed and
offices flooded, but the shattered remains of people's homes
clogged the region's waterways and landing docks with
"Even now, some boats remain tossed on land," says Eddie
Gordon, executive director of Wild American Shrimp of Mt.
Pleasant, S.C., the marketing arm of the Southern Shrimp
Alliance. "Personal and business lines of credit have been
stretched to cover the costs of repairs from the storms.
Rebuilding the lost infrastructure is largely on the shoulders
companies that were struggling
due to dumped
Assessing the damage remains an ongoing task, says Ralph
Hode, coordinator of the Emergency Disaster Grant program for
the Gulf States Marine Fisheries Commission. Hode says the goal
is simple: Get back to work.
"We're all trying to recover to the extent that we'll become
productive again," says Hode.
However, to meet that goal, the federal government decided
its CDBG funds should be geared exclusively to restore marine
resources and not to fishermen who lost
Rex Caffey, an associate professor at Louisiana State
University in Baton Rouge, says protecting the resource is a
long-term strategy, if not a popular one.
"The good news for the oyster industry is that of the
federal grant money released, even though it's not direct
assistance, they'll benefit indirectly from those funds," says
Caffey. "Without federal aid, they'd have to restore their own
Caffey estimates that frontline losses - damage to boats,
docks and other industry infrastructure - incurred in Louisiana
alone exceed $500 million. Yet the total aid for the entire
Gulf Coast seafood industry was just under $127 million: $37
million for Mississippi; $3 million for Texas; $4 million for
Florida; $29 million for Alabama; and Louisiana, which bore the
full brunt of the category-5 Katrina, got nearly $53
"On an industry level, I'd say the people who by sheer luck
weren't damaged will do well," Caffey says. "It's a cruel roll
of the dice. But it doesn't mean the market value of their
shrimp will go up, because it's a global market."
Gordon says interest in domestic shrimp has been steadily
increasing, but cannot say what portion of that demand was a
result of the storms.
"While it takes a long time to recover from the
unprecedented nature of the hurricanes, the shrimp industry
remains optimistic as it finds new markets," he says.
Planning for the future
Nobody can control Mother Nature. What the Gulf seafood
industry seeks instead is a way to prevent future financial
losses caused by natural disasters and to be less dependent on
government aid, if and when another strikes. Oyster farmers in
Louisiana, the nation's top oyster-producing state at
approximately 250 million pounds (in shell) annually, are now
taking matters into their own hands by pursuing a group crop
However, a key question remains: Will the federal government
assess and insure oyster crops the same way as land-based
agricultural products like wheat, corn and soybeans? Robert
Cerda, a crop insurance expert with 25 years of experience,
says the industry will soon find out.
"Katrina drove home the idea that it's nuts not to have crop
insurance, because [oyster farmers] got absolutely clobbered,"
says Cerda, president of Crop Insurance Systems of Olathe,
Cerda has been working with Louisiana and Mississippi oyster
farmers since April 2005 to design a group insurance plan
similar to those available to farmers of agricultural products.
But Cerda, who is working without a contract and will not get
paid if the indemnity system he's devised isn't accepted, says
getting this program through Congress is no slam-dunk.
"Oysters are the most unique commodity I know of," Cerda
says. "Every other [agricultural product] I'm aware of has at
the very least
the backstop of the Farm Service Agency's
non-insured disaster program. Oysters don't."
On Nov. 15, Cerda and other oyster industry reps met with
the Federal Crop Insurance Board of Directors to show them how
the proposed program complies with law. If it passes an expert
review, which could take 60 days, the plan could be marketed as
early as spring 2007.
To gain approval, the insurance plan must pass two tests: it
must provide value to the producers and have an actuarial rate.
In other words, the premium charges for the insurance must be
sufficient to cover the losses. But Cerda admits that oyster
cultivation presents an unusual hurdle for insurance.
"Insuring crops is mostly about, 'Let me see your crops so I
can see what happened,'" he says. "But there are two barriers
with oysters: One, you can't see the crop, and two, in the
event of a loss, an insurance company would not accept the
situation of putting an inspector in scuba gear."
With underwater oyster crops essentially invisible to the
naked eye, he says, an historical index is necessary for
crop-loss insurance claims. The group insurance plan would mete
out indemnities based on an oysterman's expected landings, an
average of the past three seasons or share of the average
oyster production in a given water basin. If harvesters choose
to insure their crops, they select a coverage level ranging
from 90 percent to 65 percent of the expected landings.
It's not a flawless system: The plan doesn't cover a new
oysterman, for instance, and provides no individual assurance
of an oyster harvest.
"The advantage [of a group plan] is the payment scheme is
already put together. There's no mystery," Cerda says. "The
downside is if an oyster producer suffers an individual loss,
say a change in the concentration of salt in the water or
predators come and take only their oysters or a disease breaks
out and it affects only their crop, there's no indemnity."
After witnessing the damages caused by Hurricane Katrina, an
affordable group insurance program is just what the industry
says Mike Voisin, VP of Motivatit Seafoods in Houma,
chairman of the Louisiana Oyster Task Force.
"It lets us work in the realm of modern-day banking," Voisin
says. "Does it solve all our problems? No. One of the
challenges that fishermen face in getting a loan is having an
insured vessel as collateral. It's often prohibitive to
purchase insurance, but without it they can't get loans to fix
their boats. A lot of the seafood community is uninsured or
Clean bill of health
In August, as the one-year anniversary of Hurricane
fall approached, U.S. Commerce Secretary Carlos
M. Gutierrez declared that the region's seafood supply showed
no signs of elevated contaminants, toxins or pathogens. In
fact, most seafood samples taken by NMFS were considered clean
just two weeks after the storm.
"That's great news for the Gulf Coast fishing industry,
which represents one-fifth of our nation's
production, and for all of us who enjoy seafood," Gutierrez
Fish stocks also responded well, and the overall abundance
of shrimp and bottom fish in early 2006 had increased 30
percent from 2004 levels.
"A little 'Bubba Gump bounce' was going on," says Barisich.
"Those who were able to go back fishing did well, because for
two-and-a-half months nobody touched 'em. The crop was ripe for
Yet the domestic shrimp industry still faces an uphill
battle. Supplies from this year's shrimp harvest, nearly double
last year's, are keeping prices down. Competition with cheaper
imports is also taking a toll. And
the massive infrastructure
damages still make it difficult to get shrimp
Silver linings may be few, but Hurricane Katrina did force
the industry to rethink before it rebuilds. Industry veteran
Don Schwab, whose family has worked in seafood for generations,
is starting a new Gulf shrimp processing business in
Independence, La., with Katrina close in mind.
Schwab's state-of-the-art, 35,000-square-foot refrigerated
facility will be set further inland for increased shelter from
winds and floods. Instead of sitting on the shore, DoRan
Sea-Pak will be located about 45 miles east of Baton Rouge.
Employing more than 100 people, it should be up and running by
the May shrimping season.
"[Katrina] made you look at life differently; [it was] a big
awakening," Schwab says. "I think it's affected everybody along
the Gulf Coast. There was so much devastation."
The calls for help continue. Anne Milling, founder of Women
of the Storm, whose members, families and businesses were
affected by Hurricanes Katrina and Rita, took a contingency of
130 members to Washington, D.C., in September to appeal to
Congress to visit the region and witness the remaining
"[It was] an urgent request to experience what the lens
cannot reveal, what the auditor cannot calculate and what the
heart cannot feel without setting foot on the ground and
touching the people," says Milling.
The Louisiana Oyster Task Force is working with the
Louisiana Recovery Authority to launch a "Back to the Dock"
program to cover farmers' uninsured losses, similar to the CDBG
funds that were made available to New Yorkers after 9/11. On
Nov. 2, Voisin requested an additional $50 million from the LRA
for Louisiana oystermen because, he says, there's simply too
much at stake.
"The industry could lose generations, young people who won't
be there in the future," Voisin says. A
decision on the
request is expected this month.
Obstacles remain for an embattled Gulf Coast seafood
industry that only seeks a return to normal. Yet a full
recovery seems almost certain considering the resolve and
resiliency of its people.
"We've been challenged in recent years by the global
marketplace, and now is the time to see what changes need to be
made," says Smith of the LSPMB. "Quality will be the major push
in the next few years, because we can compete on quality."
Assistant Editor James Wright can be